U.S. Trying to Weaken Impact of Sanctions

The Clinton administration, having reluctantly imposed congressionally mandated sanctions against Pakistan for conducting underground nuclear tests, has begun searching for ways to ease their impact on a longtime ally, U.S. officials said Friday.

On orders from the White House, top administration policymakers in several Cabinet departments are looking for potential loopholes in the sanctions law, as well as for offsetting measures to mitigate the sanctions’ burden on Pakistan.

U.S. officials said the administration’s efforts reflect two basic considerations: India started the recent round of nuclear testing, making it almost impossible for Pakistan not to respond, and sanctions are certain to hit Pakistan harder than its economically stronger foe.

The review was launched as the United States called an emergency meeting of foreign ministers of the five permanent members of the U.N. Security Council on Friday in New York in hopes of working out a coordinated approach to the tensions in South Asia. Secretary of State Madeleine Albright will serve as chairwoman of the high-level conference.

Although they did not outline the agenda, officials said the five nations--the United States, Britain, France, Russia and China, all nuclear powers themselves--will discuss ways to persuade India and Pakistan to sign international treaties limiting nuclear proliferation. The meeting could be expanded to include other key governments, an administration official said.

Meanwhile, White House Press Secretary Mike McCurry said the United States had sent “strongly worded” diplomatic cables to India and Pakistan warning of “severe negative consequences” for U.S. relations with each country if they do not curb their arms race.

McCurry indicated that the cables did not outline specific consequences, but he implied that President Clinton’s previously scheduled trip to the region next fall is now in serious doubt. He said U.S. relations with both countries are “now in jeopardy.”

But the administration is in conflict over punishment: Pakistan’s economy is considerably weaker than India’s. Consequently, the nation is far more dependent on foreign aid, trade credits and lending from the International Monetary Fund and World Bank, all of which will be curtailed under sanctions.

Pakistan, for example, gets more than half the money it needs to finance its mounting trade and investment deficits from so-called official sources such as the IMF and World Bank. By contrast, India draws virtually all the capital that it needs from private investment.

Similarly, India has about $26.3 billion worth of foreign-exchange reserves on hand to help shore up its currency. Pakistan has a relatively scant $1.3 billion.

As a result, officials say, the sanctions law has forced the administration to punish a long-standing U.S. ally--and the lesser offender in the recent round of nuclear testing--while imposing a comparatively lighter sentence on the regime that started the race.

David Sloan, a former State Department economic strategist now with the Scowcroft Group, a private consultative body, said finding a way to ease the burden on Pakistan has become “the $64 question” in the administration’s handling of the sanctions issue.

U.S. officials involved in the search said Friday that policymakers had not yet come up with specific strategies and were unlikely to offer concrete proposals any time soon.

State Department spokesman James P. Rubin suggested that the administration is looking for longer-range solutions. He told reporters that sanctions are only “a tool” and “not an end in themselves.”

Rubin said the United States hopes that next week’s Big Five meeting might hammer out a stand on such issues as how to prevent the South Asian arms race from escalating and how to persuade India and Pakistan to sign the Comprehensive Test Ban Treaty.

If the Big Five nations can agree on such an approach, Rubin said, they may broaden the effort to include other countries.

“There will be disagreements, for sure. But on the overall seriousness of the situation and the need to head off dangers, there is pretty much of a consensus,” one senior administration official said.

There were few details, however, about how these new dangers might be averted.

“I don’t think anyone really knows what to do here,” said Joseph Cirincioni, senior associate at the Carnegie Endowment for International Peace. “This is new territory. People are trying very hard to see if the tools we have been using, like sanctions and negotiations, can be used here. I think there are a lot of people in some very tough meetings around town today.”

Under the sanctions law, the U.S. must cut off virtually all foreign aid to Pakistan and India, including military sales and trade credits, and oppose loans to both countries from the IMF and World Bank.

Although the White House has suggested that it has some flexibility in administering sanctions, other officials say it has very little leeway.

The legislation permits the administration to delay imposition of sanctions for up to 30 days and to exempt humanitarian food aid. But Clinton has already decided not to take advantage of the waiting period, and food aid is only a small piece of the Pakistani package.

“They’re pretty locked in as a result of the legislation,” said Ernest H. Preeg, a foreign policy specialist at the Center for Strategic and International Studies, a nonpartisan research group. “They have to treat both countries the same.”

Yet even if it concluded that its hands were tied, the administration could encourage other countries to take steps to alleviate the impact of sanctions on Pakistan.

A senior administration official acknowledged Friday that the United States will not attempt to block assistance from Pakistan’s Islamic allies, notably oil-rich Saudi Arabia. Among other things, Washington wants to avoid any temptation for Pakistan to transfer missile or nuclear technology to other parties in exchange for financial aid.

Several analysts suggested that the administration could follow the same course it employed in easing sanctions against China years after the Tiananmen Square massacre: It continued to oppose IMF and World Bank lending to China while quietly urging Japan and Europe to vote in favor.

At the same time, a broader question looms: Should Clinton eventually ask Congress to repeal the sanctions legislation altogether?

Doing so would allow the administration to roll back the sanctions on Pakistan in their entirety and possibly provide the government in Islamabad with military equipment.

Analysts say that to get repeal legislation through Congress, the administration probably would have to propose lifting sanctions on both India and Pakistan in return for some sort of minimum conditions that both countries would pledge to observe.

Staff writers Jim Mann, Janet Hook, Robin Wright and Jonathan Peterson of The Times’ Washington Bureau contributed to this report.